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Industries · Luxury and fashion

Luxury and fashion

How luxury houses earn very high margins through brand pricing power, why directly operated stores and wholesale have different economics, how travel retail and currencies shape results, how fast fashion differs, and how to crack luxury and fashion cases.

37 min3 lessons Last reviewed
Start lesson 1 How luxury and fashion make money

Key takeaways

  • A luxury brand sells scarcity and desire, not just a product. Its prices are set far above the cost of making the item, and it protects those prices by controlling where and how the item is sold.
  • The same product can earn very different profit depending on where it is sold and at what price it finally sells.
  • Luxury demand moves with a small number of wealthy clients and with where they travel.
By the end you will be able to
  • Explain what makes luxury different from mass fashion, and the main distribution channels
  • Compare the economics of a directly operated store and a wholesale sale
  • Calculate sell-through, markdown effects, and currency effects on reported growth
  • Describe the main luxury groups and markets (China, the Gulf, Europe, the US) and the trends of 2024 to 2026

Lessons

1

How luxury and fashion make money

Luxury versus mass fashion, the value chain and channels (stores, wholesale, travel retail, franchise partners), and approximate cost structures.

9 min
2

Luxury and fashion economics: channels, markdowns, and currency

Compare a handbag sold in an own store and through wholesale, see what markdowns do to fast fashion margins, and separate currency effects from real growth.

15 min
3

Luxury players, markets, trends, and how to crack the cases

The main luxury groups, the key markets of China, the Gulf, Europe, and the US, the slowdown and stabilization of 2024 to 2026, regulation basics, and case prompts.

13 min

Worked cases in this module

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Key terms